The Supreme Court yesterday overturned the Court of Appeal's judgment in Zurich Insurance PLC UK Branch v International Energy Group Limited [2015] UKSC 33. This case dealt with the law in Guernsey on exposure to asbestos where there is no equivalent to the Compensation Act 2006. The case concerned whether an insurer is liable to indemnify an employer for the entire compensation the employer had paid to an employee (who had died from mesothelioma), despite the insurer only insuring the employer for six out of 27 years of the employee's employment.
The Supreme Court unanimously held that the rule of pro rata liability for the period of exposure, established in Barker v Corus (UK) plc [2006] UKHL 20, continues to apply in Guernsey and therefore Zurich was only liable to pay compensation in proportion to the period of cover it provided to IEG. Had Guernsey had an equivalent to the Compensation Act 2006 (which reversed Barker in the United Kingdom), by a 4-3 majority, the Court held that Zurich would have been liable for the full 100% loss, but with a right of recovery pro rata from other insurers and/or IEG to reflect the fact that it had only insured IEG for six of 27 years of exposure to asbestos.
Click here to read the full case alert.